Year-End Financial Do’s & Don’ts for Condos, Coops and HOA’s!
CAN Corporate Sponsor, Kane & Company, Certified Public Accountants & Advisors, provides us with the following helpful year-end financial Do’s & Dont’s for your association.
- Consider whether the budget should include a line item for working capital or whether there should be a special assessment.
- Consider the current expected delinquencies and be conservative; otherwise it could be painful when the next year’s budget is prepared.
- Consider special projects that cannot be fully funded from reserves.
- Consider increases in expenses and be realistic about reduction of costs.
- Anticipate contracts that expire and contracts that automatically renew.
- Include in every annual meeting a membership vote to approve a resolution for tax purposes (Revenue Ruling 70-604, allowing a carryover of excess membership income, if any, to the next year).
- Be sure that the financial statements include the prior year’s audit adjustments.
- Be sure that all reserve expenditures have been ratified by the Board.
- Follow the statutory procedures for budget approval.
- Determine if the Association’s net worth (operating fund balance) is adequate. Consider an assessment for additional working capital if necessary.
- Review basic financial controls to minimize waste and any possibility of misappropriation of Association funds
- Don’t post any current year expenditures to the beginning fund balance.
- Don’t just annualize every expense when preparing the budget. Understand every category and what needs to be included in next year’s budget.
- Don’t be political in the budget process. Sound fiduciary responsibility dictates working for the best interest of all owners.
- Don’t let payables become delinquent; otherwise this could result in a poor credit rating and jeopardize basic services as well as insurable interests.
For more information about what your association should be doing regarding your operating budget, please visit Kane & Company at www.associationcpas.com.
On a separate note, there will be an important Town Hall meeting sponsored by Miami Beach Commissioner Jerry Libbin in an effort to continue the battle to hold lenders more resonsible for the properties on which they hold first mortgages in community associations. This Town Hall meeting will take place on Monday, December 14th at the Loew’s Hotel located at 1601 Collins Avenue in Miami Beach from 5:00 to 7:00 pm. CAN has once again promised to assist Commissioner Libbin and all other interested legislators in the fight to help struggling associations who are currently protecting bank assets throughout delayed lender foreclosure actions. Towards that end, CAN has already drafted a lender reform bill for several key legislators (more information on that bill to come).
In the interim, board members and association managers are urged to attend. If you wish to do so, please RSVP on or before December 7th via email at firstname.lastname@example.org or by phone at 305-673-7106.
For more information, please contact Dara Lahav at 1-855-CAN-TIPS (226-8477) or via email at email@example.com